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Demand flexibility service for business

The National Grid‘s demand flexibility program provides financial incentives to businesses that are willing to adjust their electricity consumption schedules.

This guide provides detailed information about a service designed for businesses. It will help you understand how your company can use the service to save money.

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What is the demand flexibility service?

The demand flexibility service solves a problem in the UK electricity grid: ensuring we have enough power when we require it.

As we work towards cleaner energy (decarbonization), wind farms provide a lot of our electricity. They’re great when it’s windy and can power the whole country. But when there’s no wind, they can’t generate any electricity.

On calm days, we use coal power plants to meet our energy needs. However, this choice has a negative impact on the environment.

To reduce our reliance on fossil fuels, the demand flexibility service asks homes and businesses to use less electricity when demand is high, and business energy supply is low.

It rewards businesses with money if they cut back or delay their electricity use during these peak times.

This guide will show how your company can benefit from demand flexibility service, starting with what you need to begin.

Requirements for the demand flexibility service

To use demand flexibility data, you need a special energy meter that tracks your business’s electricity usage.

You can have one of two types of meters on your business premises:

  1. A half-hourly meter (usually used by big businesses)
  2. A smart meter

A smart meter can help your energy supplier see how well you’re cutting back on electricity during peak times. They compare your electricity use during high-demand times to your usual consumption to figure out your rewards.

And don’t forget, your energy supplier needs to be part of the program for you to benefit.

Business Energy comparison

More than 60 energy suppliers cater to the electricity and gas needs of commercial companies. To reap the advantages of the demand flexibility service, your chosen supplier must willingly join the program.

Here is the list of suppliers currently participating in the demand flexibility service:

  • CarbonLaces
  • Conrad Energy
  • CUB
  • Drax
  • EDF
  • Engie
  • Equiwatt
  • Flexitricity
  • Grid Beyond
  • Gridimp
  • Perse Technology
  • Oaktree Power
  • Octopus Energy
  • Pearlstone Energy
  • VpowerU
  • Zenobe Energy

Considering a switch to a business energy supplier that provides the demand flexibility service?

Start your business energy comparison today, get in touch with our energy experts to get started.

Design Elements

How will the demand flexibility service work for business?

The demand flexibility service had its initial trials in the winter of 2022-23. Here’s how each test operated:

  1. Electricity grid operators relied on weather forecasts to identify peak times when renewable business energy generation was expected to be low.
  2. The day before these peaks, the national grid instructed participating business energy suppliers to lower their customers’ electricity usage during the high-demand, low-supply period.
  3. Your business energy company informed your company about the peak time, the request for demand flexibility, and the incentive they would provide for reducing consumption.
  4. During this period, you implemented measures to decrease electricity consumption, such as adjusting the schedules of EV charging stations or the usage timing of common kitchen appliances.
  5. After the peak period ended, your business energy provider compared your usage during the event to your typical daily usage to determine your financial incentive.

What are the incentives in the demand flexibility service?

The demand flexibility service is a competitive arena in which electricity providers for businesses vie to offer demand reduction services. The magnitude of the reward granted to these providers hinges on prevailing energy market conditions.

However, the initial pricing structure within this program indicates that suppliers are compensating their business customers at a rate of approximately £3 per kilowatt-hour (kWh) of electricity conserved during peak hours. When compared to the typical business electricity tariff rate of £0.20 per kWh, this translates to substantial savings.

To illustrate the scale of these incentives, even a simple action like postponing a single dishwasher cycle to off-peak hours can yield an incentive payment of £4. This incentive pay out can be particularly substantial for businesses equipped with electric vehicle charging stations or other energy-intensive devices.

Notably, Drax, a business energy provider, recently reported disbursing £90,000 to their business customers, in the inaugural month of the demand flexibility service.

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What’s the future of the flexible energy grid?

The demand flexibility service offers an initial preview of what lies ahead for the future of business energy contracts in the smart grid.

The grid envisions harnessing technology to enhance its ability to regulate electricity demand in the coming years.

One example of this idea is using EV batteries to store excess electricity during periods of low demand. The stored electricity can then be returned to the grid during times of high demand.

Design Elements

What other incentives are there for business electricity?

The Ukraine conflict has led to an unprecedented price surge in wholesale energy prices.

Given this challenging landscape, businesses must take every measure to minimize their utility expenses.

Besides the demand flexibility service, the current relief for business energy bills comes from the Energy Bill Relief Scheme, which automatically reduces electricity costs.

The Energy Bill Relief Scheme ended in April 2023 and was replaced by the Energy Bill Discount Scheme which runs from April 2023 to March 2024.

We strongly advise exploring the market to compare business energy rates and secure the best deal for your company’s requirements.

Compare business energy rates with Business Energy Comparison

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